The Economic Forecast for 2011

While nothing is certain when eyeing the future, it seems Americans will face 2011 arm-in-arm with many of their 2010 ailments.

2010 was nothing but trouble for many hardworking Americans. Over the past 12 months, we watched as unemployment figures soared to double-digits and people lost their jobs. During that same time, many consumers racked up excessive debt in order to make ends meet and many homeowners faced foreclosure because they couldn't make their mortgage payments.

These dire facts took a toll on Americans' psyche and wallets. According to a team of Yale researches supported by the Rockefeller Foundation, a 2010 study designed to measure the economic well-being of American families found that one in five American households is financially insecure, the highest level in the past 25 years.

So as we usher in the New Year, is there hope for the future? Will there be more jobs? Will the housing market stabilize? Will the price of gasoline decrease? Or, will Americans face another challenging year, ripe with the same concerns and issues that plagued them in 2010?

You can never be certain when predicting the future. We'd all be rich off the lottery if you could. However, here are some thoughts as to what the face of 2011 might look like.

Taxes

President Obama has signed new legislation to extend expiring tax credits enacted originally by former President George W. Bush. While Democrats and Republicans had different agendas in this effort, they backed a compromise framework on tax cuts, unemployment insurance and job growth. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides tax relief in the hopes of creating jobs and accelerating job growth.

"It will help lift up middle-class families, who will no longer need to worry about a New Year's Day tax hike. It will offer emergency relief to help tide folks over until they find another job. And it includes tax cuts to make college more affordable; help parents provide for their children; and help businesses, large and small, expand and hire."

Measures written into the legislation will prevent a tax increase of over $2,000 for the typical family. To see how much you could gain from the tax plan based on your income, click on this interactive graphic.

On a brighter note and casting a longer future outlook, a report from the BLS states that, total employment is expected to increase by 10% from 2008 to 2018, adding 15.3 million jobs. "Changes in consumer demand, improvements in technology, and many other factors will contribute to the continually changing employment structure of the U.S. economy."

Professional, scientific, and technical services. Employment in professional, scientific, and technical services is projected to grow by 34%, adding about 2.7 million new jobs by 2018. Jobs related to computer systems design and affiliated services are expected to increase the most, followed by management, scientific, and technical consulting services.

Healthcare and social assistance. Driven by an aging population and longer life expectancies, about 26% of all new U.S. jobs will be in the healthcare and social assistance industry, which includes public and private hospitals, nursing and residential care facilities, and individual and family services. This industry is expected to grow by 24%, representing 4 million new jobs.

Construction. Employment in construction is expected to rise 19%. Demand for commercial construction and an increase in road, bridge, and tunnel construction are reasons behind the majority of this growth.

Educational services. Employment in public and private educational services is anticipated to grow by 12%, adding about 1.7 million new jobs through 2018 due to rising student enrollments at all levels of education.

Housing

But the Fed isn't the only entity projecting such negativity. Through its online housing market predictor, the Home Buying Institute suggests that while home-buying activity should rise slightly in 2011, home prices could decline another 6% to 9% (or by as much as 11%, according to a Morgan Stanley report). They also predict that mortgage rates will tick up gradually and approach or exceed five percent by the end of 2011.

Any Must-Do's for 2011?

Prospects seem dim for 2011, but one thing is for certain: If you are battling to get out of debt, you need to continue to fight furiously and get to the point where you can better prepare yourself should financial trouble strike again - whether through unexpected job loss, medical emergency, or economic meltdown.

The data speaks for itself when it comes to the need to right your financial ship. A recent study by the Rockefeller Foundation and Yale University titled "Standing on Shaky Ground: Americans' Experiences With Economic Insecurity," found that 93% of American households suffered at least one "substantial economic shock" in the 18-month period from March 2008 to September 2009. Additionally, little more than 29% of Americans said their household could go longer than six months or longer without hardship if their earnings stopped tomorrow. A startling one in five could last no longer than two weeks.

So the basic financial mantra of saving more and buying less still prevails, regardless of the economy and what may come in 2011. When you can't predict the future, it's best to step back to the basics regardless of the economy.

According to recent statistics compiled by the Federal Reserve, household debt currently stands at 114.6 percent of disposable income. Since people are spending more than they make, many are finding it more and more difficult to keep up with their bills. The strain that causes on your budget is obvious, but what you may not know is that the stress of dealing with debt can also have a significant negative impact on your physical and mental health.

Finding ways to trim your budget is a great way to save money and feel in control when the economy isn’t. But before you get too “trim happy,” keep in mind that there are a few expenses not to cut. It may be tempting to skimp on these items, but they’ll cost you more in the long run.

There's no right or wrong time to rebalance your budget, but since the New Year is traditionally a time to make resolutions, it's also an excellent time to resolve to get your finances back on track. Since we each have unique aspects to our financial situations, there is no one solution that will work for everyone, but let's look at some fundamentals that anyone can apply to help you get ahead this year.